cokevs-pepsi-120314205511-phpapp02.pptx

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Coke and Pepsi Learn to

Compete in India



The Indian Market (1990’s)

Strict laws and changing political setting

Six favorite drinks: cola, cloudy lemon, orange, soda, mango and clearlemon

Parle Thums Up, Frooti and Pure Drinks’ Campa Cola most popular drinks

BVO issues, Pesticides in water

Average Indian buys 3 bottles of soda a year

Coke entered market from 1958-1977

40% equity stake given up over trade secret



The Indian Market (1990’s)

In 1991, crisis of oil prices rising cause inflation

New government took office in June, introduced new planto help economy

Pepsi entered as Pepsi Foods Ltd. in joint venture withlocal distributor

Coke tried to reenter in 1990 by merging with Godrej but

was denied; merged with Britannia Industries India Ltd.

July 1993 Parle sells brands and plants to Coke



Political

Legal

Economical

Technological

ExternalMarket

Environment

Social

cultural

Uncontrollable factors in the IndianPolitical Environment

Political Instability and Economic

depression

The Principle of indigenous

availability

Stringent Foreign Collaboration

rules

Social Pressure: The Pesticide

Issue

The External Environment



The process of Adaptation

Obstacles : SRC andEthnocentrism

Developing Global Awareness

Environmental Adaptation



SWOT (PEPSI-1986)STRENGTHS

International Brand and GlobalExperience

Benefitted by learning from Coca Cola

mistakes in India from 1958 to 1977

Good Market Research on Indian market

Willingness to comply with stringent Indian

Laws

WEAKNESS

Lack of Experience in Indian market

OPPURTUNITIES

Early entry (1986) facilitated no competition

from any major International Brand

India huge size market with availability of raw materials locally (vegetables)

In 1988, local brands forced to withdraw

from market due to carcinogenic ingredient

(BVO)

THREATS

Unfriendly political environment and Indian

legal framework (maximum of 25% sale of

cola drinks)

Competition from local manufacturers

Low demand in Indian market for

carbonated drinks

Heterogeneous nature of Indian market

Poor infrastructure especially in rural India



SWOT(COCA-COLA 1993)

STRENGTHS

Well established Global Brand

Prior knowledge of Indian market (1958-

1977)

Tie up with local players (Britannia Ltd)

Strong Fiscals to acquire local business

(bottling plants/local brands)

WEAKNESS

Improper appreciation of existing Indian Laws

at entry time (in case of acquisition, 49% sale

of equity to local partners mandatory)

OPPORTUNITIES

Liberalization of Indian economy after 1991

Availability of better infrastructure

Local bottling plants were available for sale

(buy out of 4 plants from Parle)

Better acquisition opportunities (purchase of

brands such as Thums Up, Limca, Citra, Gold

Spot & Maza from Parle)

Scope for marketing diversified products

(fruit drinks, soda and packaged water)

THREATS

Strong Competition from Pepsi and other

local brands due to late entry

Stricter legal framework (49% equity toIndian Investors)

Decreasing popularity of carbonated drinks in

India



The Market Mix- PepsiPRODUCT

Lehar Pepsi & Lehar 7 up: first 2 products

Aquafina-Bottled water(10%)

New products

Modified tastes

Pepsi Blue-Limited edition

Smaller 200ml bottles

PLACE

Sold at all departmental and

provisional stores big and small

Initially in major cities of Delhi and

Bombay

PRICE

200ml and 300ml bottles at Rs.7 and

Rs.10 respectively

PROMOTIONSponsored Cricket,Soccer and Navratri

events

TV campaigns,Outdoor activities and retail

promotions

Introduced 200ml bottlesAdvertisements by famous celebrities of

India

Music video



The Market Mix- CokePRODUCT

Coca-cola Thumbs up,Limca,Gold spot,Citra and

Mazaa brands bought from Parle

Kinley-Bottled water(25% Market

share)

Modified tastes

Burn-Energy drink

PLACE

Sold at all departmental and

provisional stores big and small

PRICE

Reduced its prices of the 200ml and

300ml bottles to Rs.5 and Rs.8

respectively

PROMOTION

Sponsoring local events

Targeting the youth aged between 18-25

yearsBombay dreams and Chennai dreams songs

Successful ad campaign -” Thanda mathlab

Coco-cola”

Introduction of Rs.5 bottle

Red lounge



Coke and Pepsi entering the bottled water

market

Lack of availability of clean drinking water

Stronger brand image

India one of the top 10 water consumers in the world(Source:gts4u.com)

Higher growth rate than carbonated water

Water bottles 100% recyclable

Market value of over 1 billion dollars (Source:gts4u.com)



Burn-Energy drink

To compete against well established brandssuch as Red bull and Sobe

Distribution strategy of serving atGyms,Pubs and Bars- Marketing Mix

105 million dollarmarket(Source:businessstandard.com)



GLOBAL LOCALIZATION

Targeted local customers Advertised through local celebrities

Sponsored through local events

Strategies targeted different customer segments



Lessons learnt :

Political changes cannot be anticipated

Research popular flavors in the market

Consumer Environment

Local competitors



Question for Discussion :

Which company will succeed in the

Indian Market – Coke or Pepsi?

cokevs-pepsi-120314205511-phpapp02.pptx

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